2. Procedural History

The purpose of this rulemaking is to implement Section 390 by developing a PX-based short run avoided energy cost for purposes of paying qualifying facilities. Part of this process is the determination of any value of capacity embedded in the PX-based short-run avoided cost (SRAC), pursuant to Section 390(d). The scoping memo set forth the following additional goals:

(1) review potential modifications to the pricing methodology for as-available capacity payments;

(2) determine whether or not current methodologies for adjusting line losses need to be replaced, and if so, by what methodology;

(3) develop criteria for determining whether the market is functioning properly;

(4) identify situations that would lead to reconsideration of the adopted PX-based SRAC; and

(5) clarify regulatory procedures surrounding the payments.

On February 15 and 16, 2000, Energy Division hosted a workshop on line loss methodologies. Energy Division filed its report on the workshop on April 7, 2000.

Testimony was served on all issues except line loss issues on February 11, 2000. Rebuttal testimony was served on March 6, 2000. Testimony on line loss issues was served on April 28, 2000. Rebuttal testimony on line loss issues was served on May 8, 2000. Nine days of evidentiary hearings were held (April 3-7, April 10-11, and May 11-12). Commissioner Neeper presided at hearing on all nine days. Opening and Reply Briefs were filed by the Office of Ratepayer Advocates (ORA), Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), California Cogeneration Council and Watson Cogeneration Company (jointly CCC), Independent Energy Producers Association (IEP), Cogeneration Association of California, Energy Producers and Users Coalition, Coalinga Cogeneration Company, and Midway Sunset Cogeneration Company (jointly CAC), FPL Energy LLC (FPL), Enron Wind Corporation (EWC), Caithness Energy L.L.C. (Caithness), and California Power Exchange (PX). The Automated Power Exchange (APX) filed an Opening Brief. Final oral argument was held on September 18, 2000.

The proposed decision originally addressed all issues established as Phase 1 issues in the scoping memo. On November 21, 2000, the Assigned Commissioner issued a ruling seeking comments from the parties about how to proceed given the Federal Energy Regulatory Commission (FERC) "Order Proposing Remedies for California Wholesale Electric Markets" in Docket No. EL 00-95-000 et al. The parties overwhelmingly support suspension of our efforts to implement Section 390 given current market conditions. Several parties also support suspension of efforts to review the line loss factors. After reviewing these comments, we limit the scope of this decision modifications to line loss factors.